Peoples Daily

Local Chinese governments up to ‘little tricks’ on PPP projects: People’s Daily

Checks on some private-partnership projects (PPP) and government investment platforms in China have found that some local authorities are still up to “little tricks” and borrowing more debt than needed, the People’s Daily newspaper said.

One local authority department, for example, was found to have launched a PPP project to build a much bigger-than-required office building when it only had six staffers, the state-run newspaper reported on Monday citing an unnamed official at a city’s finance bureau.

Some governments were also shelving all risk for PPP projects by guaranteeing losses, or providing commitments to persuade financial institutions to dole out financing, the newspaper said.

“These actions disrupt the market order and also exacerbate financing risks. These loopholes must be closed in order to eliminate hidden dangers,” it said.

The Ministry of Finance with other relevant departments were taking action to implement clear policies to govern such behavior.

China has been encouraging the use of PPP to alleviate the debt burdens of its local authorities, who in the past have used debt to finance projects such as bridges and municipal works with less-than-robust analysis on future returns.

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It has also launched a market in asset-backed securities (ABS), a financing instrument via which a wide range of assets such as loans, real estate, toll ways and scenic parks have been converted into tradable bond-like securities.

China’s growing debt has been singled out by analysts and policy makers as one of the biggest risks to its economy, prompting authorities to tighten regulations over the past year to curb risky and speculative forms of lending.

North Korea’s official news agency leapt into overdrive Wednesday, accusing Chinese politicians and journalists of fomenting trouble and outright “betrayal.”

“China should no longer recklessly try to test the limitations of our patience,” said the commentary released by the rogue state’s Korean Central News Agency.

The KCNA agency added, “We have so devotedly helped the Chinese revolution and suffered enormous damage.” It said China has regularly “infringed upon the strategic interests” in becoming closer to the U.S. and thus committed a “betrayal” in the process.

The rare rebuke from Pyongyang’s official mouthpiece follows President Donald Trump’s warming ties to Chinese President Xi Jinping. The Trump administration is hoping the Chinese can convince the North Koreans to abandon a nuclear weapons program and end development of intercontinental ballistic missiles capable of reaching North America.

Still, the North’s official news agency reiterated Wednesday it has no plans to end its nuclear program.

“For us, nuclear is an absolute symbol of dignity and power, and it is the highest interest,” said KCNA. “If we give up nuclear weapons, we will not only intensify economic sanctions, but also military intervention.”

Beijing indicated Wednesday that Pyongyang was taking a dangerous course and should reconsider.

“It is reasonable for the DPRK to pursue its own security, but its nuclear and missile ambitions have put itself and the whole region into dire peril,” People’s Daily, China’s communist party’s official newspaper said in a commentary. “The DPRK must not be obsessed in a wrong path of repeated nuclear tests and missile launches that resulted in rounds of sanctions.”

DPRK is a reference to North Korea’s formal name, the Democratic People’s Repubic of Korea.

Meantime, the U.S. early Wednesday announced it launched an unarmed ICBM missile from Vandenberg AFB in California. It was the second such test in a week and comes as the Air Force works to improve the Minuteman III missile’s reliability and demonstrate to North Korea the U.S. nuclear deterrent capability.

At the same time, the U.S. is beefing up its military resources in the Asian region as a show of force with tensions still remaining high over the North Korean threat.

The U.S. Pacific Command said Tuesday it sent the Los Angeles-class attack submarine USS Cheyenne to the U.S. Navy base at Sasebo, Japan. The U.S. also activated its THAAD anti-missile defense system in South Korea this week at a former golf course.

Last week, a carrier strike group led by the USS Carl Vinson held drills off the Korean Peninsula and there’s also been recent training in the Asia-Pacific region involving F-35 stealth fighters and bomber aircraft. The U.S. military confirmed Wednesday two B-1B bombers left Guam’s Andersen AFB on May 1 to hold training missions with forces from Japan and South Korea.

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